Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large
accelerated filer [ ] Accelerated filer [ ]

Non-accelerated
filer [ ] Smaller reporting company [X]

(Do
not check if a smaller reporting company)

Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of August
5, 2013, 31,347,664 shares of the Issuer's Common Stock were outstanding.

Worlds
Online Inc. (the "Company") designs and develops software content and related technologies for the creation of interactive,
three-dimensional ("3D") Internet sites on the World Wide Web. Using licensed technology the Company creates its own
Internet sites, as well as sites available through third party on-line service providers.

The
Company was formed on January 25, 2011 as a wholly-owned subsidiary of Worlds Inc. (formerly known as Worlds.com Inc.). On May
16, 2011, Worlds Inc. transferred to the Company the majority of its operations and related operational assets, except for its
patent portfolio. Worlds Inc. has also given to the Company a perpetual world-wide license to its patented technology. Pursuant
to the license, the Company has the right to issue unlimited sublicenses to the licensed technology, subject to Worlds Inc.’s
reasonable consent.

The
assets transferred to us include: Worlds Inc.’s technology platform, Worlds Ultimate Chat, Aerosmith World, DMC Worlds,
Cinema Virtual, Pearson contracts and related revenue, the following URLs: Worlds.com, Cybersexworld.com, Hang.com, and Worldsfunds.com,
a digital inventory of over 10,000 3D objects, animation sequences, an extensive avatar library, texture maps and virtual world
architectures. None of the transferred assets have any carrying value on the financial statements of the Company.

Basis
of Presentation

The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America ("US GAAP"), which contemplates continuation of the Company as a going concern. The Company will require
substantial additional funds for development and marketing of its products. There can be no assurance that the Company will be
able to obtain the substantial additional capital resources necessary to pursue its business plan or that any assumptions relating
to its business plan will prove to be accurate. Worlds Online Inc. was not able to generate sufficient revenue or obtain sufficient
financing which had a material adverse effect on Worlds Online Inc., including requiring Worlds Online Inc. to reduce operations.
These factors raise substantial doubt about the Company's ability to continue as a going concern.

Use of Estimates

The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these
estimates.

Trading
Securities

Trading
securities is common stock in a publicly traded company that was received as compensation for performing consulting services.
The carrying value of the investment is the market price of the shares at June 30, 2013 and June 30, 2012. Any unrealized gain
or loss are recorded under other income/(expense) in the accompanying statements of operations.

Cash
and Cash Equivalents

Cash
and cash equivalents are comprised of highly liquid money market instruments, which have original maturities of three months or
less at the time of purchase.

Revenue
Recognition

The
Company has the following sources of revenue: (1) consulting/licensing revenue from the performance of development work performed
on behalf of the Company, licensing revenue or from the sale of certain software to third parties; and (2) VIP subscriptions to
our Worlds Ultimate 3-D Chat service. The Company recognizes revenue when all of the following criteria are met:
evidence of an arrangement exists such as a signed contract, delivery has occurred, the price is fixed or determinable, and collectibility
is reasonable assured. This will usually be in the form of a receipt of a customer’s acceptance indicating the
product has been completed to their satisfaction except for development work and service revenue which is recognized when the
services have been performed. Deferred revenue represents cash payments received in advance to be recorded as revenue
when earned. The corresponding cost associated with those contracts is also deferred as deferred costs until the revenue
is ultimately recognized.

Research
and Development Costs

Research
and development costs will be charged to operations as incurred.

Property
and Equipment

Property
and equipment will be stated at cost. Depreciation will be provided on a straight line basis over the estimated
useful lives of the assets ranging from three to five years. When assets are retired or disposed of, the cost and accumulated
depreciation are removed from the accounts, and any resulting gains or losses are included in income. Maintenance and
repairs will be charged to expense in the period incurred.

Impairment
of Long Lived Assets

The
Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB
Accounting Standards Codification (“ASC”) for disclosures about Impairment or Disposal of Long-Lived Assets.
Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its
expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on
either discounted future cash flows or appraised values.

Fair Value of Financial Instruments

The Company
follows paragraph 825-10-50-10 of the FASB ASC for disclosures about fair value
of its financial instruments and paragraph 820-10-35-37 of the FASB ASC (“Paragraph 820-10-35-37”) to measure the
fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in US GAAP, and
expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related
disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used
to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted)
in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair
value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level
1

Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date.

Level
2

Pricing
inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable
as of the reporting date.

Level
3

Pricing
inputs that are generally observable inputs and not corroborated by market data.

The carrying
amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values
because of the short maturity of these instruments.

The Company
does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company
did not have any fair value adjustments for assets and liabilities measured at fair value at June 30, 2013 and 2012.No
gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for the for the periods ended June 30, 2013 and 2012,
respectively.

Accounts
Payable Related Party

Accounts
payable related party is comprised of cash payments made by Worlds Inc. on behalf of Worlds Online Inc. for shared operating expenses.

Deferred
Revenue

Deferred
revenue represents advance payments for the license, the design and development of the software, content and related technology
for the creation of an interactive, 3D entertainment portal on the internet.

Stock-Based
Compensation

The Company
accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB
ASC for disclosure about Stock-Based Compensation. This section requires a public entity to measure
the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the
award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide
service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized
for equity instruments for which employees do not render the requisite service.

Income
Taxes

The Company
accounts for income taxes under Section 740-10-30 of the FASB ASC (“ASC 740”). Deferred income tax assets and
liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and
are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred
tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets
will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the
enactment date.

ASC 740
prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts.

Related
Party Transactions

The Company
follows subtopic 850-10 of the FASB ASC for the identification of related parties and disclosure
of related party transactions.

Pursuant
to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity
securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15,
to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and
profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management
of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its
own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting
parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial
statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances,
and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation
of financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s)
involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for
each of the periods for which income statements are presented, and such other information deemed necessary to an understanding
of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods
for which income statements are presented and the effects of any change in the method of establishing the terms from that used
in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if
not otherwise apparent, the terms and manner of settlement.

Comprehensive
Income (Loss)

The Company
reports comprehensive income and its components following guidance set forth by section 220-10 of the FASB ASC which establishes standards for the reporting and display of comprehensive income and its components in the consolidated
financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in
the financial statements.

Loss
Per Share

Net loss
per common share is computed pursuant to section 260-10-45 of the FASB ASC. Basic net loss per share
is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted
net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding
shares of common stock during each period. There were no potentially dilutive shares outstanding as of June 30, 2013 or 2012.

Commitments
and Contingencies

The Company
follows subtopic 450-20 of the FASB ASC to report accounting for contingencies. Certain conditions
may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be
resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment
inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against
the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal
proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the
assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment
indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be
estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material,
would be disclosed.

Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would
be disclosed. Management does not believe, based upon information available at this time that these matters will have a material
adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance
that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations
or cash flows.

Risk
and Uncertainties

The Company
is subject to risks common to companies in the technology industries, including, but not limited to, litigation, development of
new technological innovations and dependence on key personnel.

Off Balance
Sheet Arrangements

The Company
does not have any off-balance sheet arrangements.

Uncertain
Tax Positions

The Company
did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to
the provisions of Section 740-10-25 for the periods ended June 30, 2013 or 2012.

Subsequent
Events

The Company
evaluated for subsequent events through the issuance date of the Company’s financial statements.

Recent
Accounting Pronouncements

Recently
issued accounting standards

The Company
has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of
any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the consolidated
results of its operations.

In May
2011, FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common
Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04
changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information
about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair
value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively.
The Company anticipates that the adoption of this standard will not materially expand its financial statement note disclosures.

In June
2011, FASB issued ASU No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income” (“ASU
2011-05”), which amends current comprehensive income guidance. This accounting update eliminates the option to present
the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, the Company
must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections,
net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective
for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted.
The adoption of ASU 2011-05 did not materially impact or change the format of Company’s financial position, results of operations
or cash flows.

In September
2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which allows, but does not require, an entity
when performing its annual goodwill impairment test the option to first do an initial assessment of qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount for purposes of determining
whether it is even necessary to perform the first step of the two-step goodwill impairment test. Accordingly, based on the option
created in ASU 2011-08, the calculation of a reporting unit’s fair value is not required unless, as a result of the qualitative
assessment, it is more likely than not that fair value of the reporting unit is less than its carrying amount. If it is less,
the quantitative impairment test is then required. ASU 2011-08 also provides for new qualitative indicators to replace those currently
used. Prior to ASU 2011-08, entities were required to test goodwill for impairment on at least an annual basis, by first comparing
the fair value of a reporting unit with its carrying amount. If the fair value of a reporting unit is less than its carrying amount,
then the second step of the test is performed to measure the amount of impairment loss, if any. ASU 2011-08 is effective for annual
and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.
The Company adopted ASU 2011-08 during the first quarter of fiscal 2013. The adoption of ASU 2011-08 did not impact the Company’s
results of operations or financial condition.

In December
2011, FASB issued Accounting Standards Update 2011-11, “Balance Sheet - Disclosures about Offsetting Assets and Liabilities”
to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update
requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position
when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements
relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013.
The update only requires additional disclosures, as such, the Company does not expect that the adoption of this standard will
have a material impact on its results of operations, cash flows or financial condition.

In July
2012, the FASB issued ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”. The guidance allows
companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived
intangible assets is necessary, similar in approach to the goodwill impairment test.

ASU 2012-02
allows companies the option to first assess qualitatively whether it is more likely than not that an indefinite-lived intangible
asset is impaired, before determining whether it is necessary to perform the quantitative impairment test. An entity is not required
to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity
determines that it is more likely than not that the asset is impaired. Companies can choose to perform the qualitative assessment
on none, some, or all of its indefinite-lived intangible assets or choose to only perform the quantitative impairment test for
any indefinite-lived intangible in any period.

ASU 2012-02
is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early
adoption permitted. The Company is in the process of evaluating the guidance and the impact ASU 2012-02 will have on its financial
statements.

The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern. Worlds Online Inc. has had
only minimal revenues from operations, has a negative working capital, has a negative stockholders deficit and negative cash flows
from operations. There can be no assurance that the Company will be able to obtain the substantial additional capital resources
necessary to fully implement its business plan or that any assumptions relating to its business plan will prove to be accurate.
The Company is pursuing sources of additional financing and there can be no assurance that any such financing will be available
to the Company on commercially reasonable terms, or at all. Any inability to obtain additional financing will likely have a material
adverse effect on the Company, including possibly requiring the Company to reduce and/or cease operations.

These
factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

NOTE
3 - USE OF EQUITY AS COMPENSATION

During
the six months ended June 30, 2012, the Company issued an aggregate of 25,987 shares of common stock as payment for
services rendered with an aggregate value of $14,813. No shares were issued during the six months ended June 30, 2013.
However, shares previously issued for services to be performed during the six months ended June 30, 2013 were
amortized during the period in an amount equal to $81,500.

NOTE
4– DEFERRED REVENUE

Deferred
revenue represents advance payments for the license, the design and development of the software, content and related technology
for the creation of an interactive, 3D entertainment portal on the internet. During the period herein, no services
were provided. The deferred revenue balance is $226,950.

NOTE 5-
PROPERTY AND EQUIPMENT

There
is no property and equipment on the balance sheet at June 30, 2013. The Company does have property and equipment, however, for
accounting purposes, the property and equipment that was transferred was fully depreciated by Worlds Inc. prior to the transfer
therefore it has no carrying value to the Company.

NOTE
6 – STOCK OPTIONS

During
the six months ended June 30, 2013, no stock options or warrants were exercised. There are no outstanding warrants as of June
30, 2013.

Stock Warrants and
Options

Stock options outstanding and exercisable
as of June 30, 2013 are as follows:

At June 30, 2013, the
Company had federal and state net operating loss carry forwards of approximately $1,483,000 that expire in 2024.

Due to
operating losses, there is no provision for current federal or state income taxes for the six months ended June 30, 2013 or 2012.

Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amount used for federal and state income tax purposes.

The Company’s
deferred tax asset at June 30, 2013 consists of a net operating loss calculated using federal and state effective tax rates equating
to approximately $579,000 less a valuation allowance in the amount of approximately $579,000. Because of the Company’s lack
of earnings history, the deferred tax asset has been fully offset by a valuation allowance.

The Company’s
total deferred tax asset as of June 30, 2013 is as follows:

Net operating
loss

$

579,000

Valuation allowance

(579,000)

Net deferred
tax asset

$

—

The reconciliation
of income taxes computed at the federal and state statutory income tax rate to total income taxes for the period ended June 30,
2013 and 2012 is as follows:

2013

2012

Income
tax computed at the federal statutory rate

34

%

34

%

Income tax computed
at the state statutory rate

5

%

5

%

Valuation allowance

(39

%)

(39

%)

Total deferred
tax asset

0

%

0

%

The valuation allowance
increased by approximately $116,000 and $95,000 for the six months ending June 30, 2013 and 2012 respectively.

NOTE
8 - Trading Securities

Marketable equity securities

Cost

Market
value

Unrealized
Loss

$

75,000

$

20,625

$

34,375

Fair
market measurement at June 30, 2013 were computed using quoted prices in an active market for identified assets, (level 1). The
shares were obtained as compensation for performing consulting services.

During
the six months ended June 30, 2012 the Company sold 100,000 shares of marketable equity securities for a loss of $6,523.

The unrealized
gain for the six months ended June 30, 2013 is $1,375 and the unrealized loss for the six months ended June 30, 2012 is $25,500
and are included in the Statement of Operations.

The Company
was formed on January 25, 2011 as a wholly-owned subsidiary of Worlds Inc. (formerly known as Worlds.com Inc.). On May 16, 2011
Worlds Inc. transferred to the Company the majority of its operations and related operational assets, except for its patent portfolio.
Worlds Inc. has also given to the Company a perpetual world-wide license to its patented technology. Pursuant to the license,
the Company has the right to issue unlimited sublicenses to the licensed technology, subject to World Inc.’s reasonable
consent.

The assets
transferred to the Company include: Worlds Inc.’s technology platform, Worlds Ultimate Chat, Aerosmith World, DMC Worlds,
Cinema Virtual, Pearson contracts and related revenue, the following URLs: Worlds.com, Cybersexworld.com, Hang.com, and Worldsfunds.com,
a digital inventory of over 10,000 3D objects, animation sequences, an extensive avatar library, texture maps and virtual world
architectures. None of the transferred assets have any carrying value on the financial statements of the Company. Deferred revenue
was also transferred from Worlds Inc. and it was $226,950 at June 30, 2013 and 2012.

Account
payable related party is comprised of cash payments made by Worlds Inc. on behalf of Worlds Online Inc. for shared operating expenses.
The balance due at June 30, 2013 is $256,980. Included in the accompanying Balance Sheets at June 30, 2013 and December 31, 2012
is $256,980 and $134,653, respectively, payable to Worlds Inc. for payments due on shared expenses.

NOTE - 10 Commitments
and Contingencies

The Company
is committed to an employment agreement with its President and CEO, Thom Kidrin. The agreement,
dated as of August 30, 2012, is for five years with a one-year renewal option held by Mr. Kidrin. The agreement provides
for a base salary of $175,000, which increases 10% on September 1 of each year; a monthly car allowance of $500; an annual bonus
equal to 2.5% of Pre-Tax Income (as defined in the agreement); an additional bonus as follows: $75,000, if Pre-Tax Income for
the year is between 150% and 200% of the prior fiscal year’s Pre-Tax Income or (B) $100,000, if Pre-Tax Income for the year
is between 201% and 250% of the prior fiscal year’s Pre-Tax Income or (C) $200,000, if Pre-Tax Income for the year is 251%
or greater than the prior fiscal year’s Pre-Tax Income, but in no event shall this additional bonus exceed five (5%) percent
of Pre-Tax Income for such year; payment of up to $10,000 in life insurance premiums; options to purchase 4.5 million shares of
Worlds Online Inc. common stock at an exercise price of $0.01 per share, of which one-third vested on August 30, 2012, one-third
vest on August 30, 2013 and the balance vest on August 30, 2014; a death benefit of at least $2 million dollars; and a payment
equal to 2.99 times his base amount (as defined in the agreement) in the event of a Change of Control (as defined in the agreement).
The agreement also provides that Mr. Kidrin can be terminated for cause (as defined in the agreement) and that he is subject to
restrictive covenants for 12 months after termination. The balance due Mr. Kidrin at June 30, 2013 is $117,926 and is included
in accrued expenses.

The Company
is committed to a consulting agreement with an unrelated business consultant. The contract is dated January 1, 2012, calls for
monthly payments in the amounts of $5,000 for the 24 month term of the contract and expires on December 31, 2013.

Item
2. Management's Discussions and Analysis of Financial Condition and Results of Operations

Forward
Looking Statements

When
used in this form 10-Q and in future filings by the Company with the Commission, the words or phrases such as "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "plan,"
"predict," "project," "will" or similar expressions are intended to identify “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place
undue reliance on any such forward looking statements, each of which speak only as of the date made. Such statements are subject
to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently
anticipated or projected. The Company has no obligation to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

These
forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to
be materially different. These factors include, but are not limited to, changes that may occur due to general economic and
business conditions; changes in current pricing levels that we can charge for our services or which we pay to our suppliers
and business partners; changes in political, social and economic conditions in the jurisdictions in which we operate; changes
to regulations that pertain to our operations; changes in technology that render our technology relatively inferior, obsolete
or more expensive compared to others; foreign currency fluctuations; changes in the business prospects of our business
partners and customers; increased competition, including from our business partners; delays in the delivery of broadband
capacity to the homes and offices of persons who use our services; general disruptions to Internet service; and the loss of
customer faith in the Internet as a means of commerce.

The following
discussion should be read in conjunction with the unaudited financial statements and related notes which are included under Item
1.

We do
not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.

Overview

General

We are
a 3D entertainment portal which leverages its proprietary technology to offer visitors a network of virtual, multi-user environments
which we call "worlds". These worlds are visually engaging online environments featuring animation, motion and content
where people can come together and, by navigating through the website, shop, interact with others, attend events and be entertained.

Sites
using our technology allow numerous simultaneous visitors to enter, navigate and share interactive "worlds". Our 3D
Internet sites are designed to promote frequent, repeat and prolonged visitation by users by providing them with unique online
communities featuring dynamic graphics, highly useful and entertaining information content, and interactive capabilities. We believe
that our sites are highly attractive to advertisers because they offer access to demographic-specific user bases comprised of
people that visit the site frequently and stay for relatively long periods of time.

We were
formed on January 25, 2011 and effective May 16, 2011 Worlds Inc. (formerly known as Worlds.com Inc.) transferred to us a substantial
portion of its operational assets and granted us a world-wide license to its existing, and future, 3-D related patent portfolio.
Accordingly, we have only had operations of our own since May 16, 2011. Our fiscal year ends on December 31.

Revenues

Revenue that was generated
resulted from VIP subscriptions to the Worlds Ultimate 3-D Chat service.

We
were able to issue equity in 2011 and raise a small amount of capital that enabled us to begin upgrading our technology, develop
new products and actively solicit additional business. We continue to pursue additional sources of capital though we
have no current arrangements with respect to, or sources of, additional financing at this time and there can be no assurance that
any such financing will become available. If we cannot raise additional capital, form an alliance of some nature with another
entity, or start to generate sufficient revenues, we may need to scale back operations.

RESULTS
OF OPERATIONS

Our net
revenues for each of the three months ended June 30, 2013 and 2012 were $128 and $242, respectively. Our net revenue for the six
months ended June 30, 2013 and 2012 were $339 and $432, respectively. The decrease in revenue is not significant due to the revenue
being minimal for both years.

Three
and six months ended June 30, 2013 and June 30, 2012

Revenue
decreased by $114, to $128 for the three months ended June 30, 2012 from $242 in the prior year. Revenue is from VIP subscriptions
and the amounts for both years are minimal. The company continues to be operated in a severely diminished mode due to the lack
of liquidity. We need to raise a sufficient amount of capital to provide the resources required that would enable us to continue
running the business.

Cost
of revenues increased by $8,047 to $13,585 in the three months ended June 30, 2013 from $5,538 in the three months ended June
30, 2012. The increase is due to a small increase in software development work.

Selling
general and administrative (S, G & A) expenses decreased by $3,665 from $53,002 to $49,337 for the three months ended June
30, 2012 and 2013, respectively. Decrease is primarily due to an overall decrease in business activity due to the lack of funds.

Payroll
and related taxes expense increased by $9,902 from $33,848 to $43,750 for the three months ended June 30, 2012 and 2013, respectively.
Increase is due to the employment agreement signed in August 2012 whereby before that the CEO’s payroll was allocated based
on time spent between Worlds Inc and Worlds Online Inc.

Common
stock issued for services rendered decreased by $30,500 from $47,500 to $17,000 for the three months ended June 30, 2012 and 2013,
respectively. One agreement expired on April 15, 2013 resulting in amortizing that cost for only 15 days in 2013 whereby in 2012
the cost was amortized over the full 3 months resulting in the decrease in 2013.

Under
other income/(expense) for the three months ended June 30, 2013, we had an unrealized gain on the market value of our investment
in a publicly traded security of $1,375 and for the three months ended June 30, 2012, we
had an unrealized loss on the market value of our investment in a publicly traded security of $6,000.

As a
result of the foregoing, we realized a net loss of $125,367 for the three months ended June 30, 2013 compared to a loss of $145,646
in the three months ended June 30, 2012, a decreased loss of $20,279.

Revenue
decreased by $93 to $339 for the six months ended June 30, 2013 from $432 in the prior year. The business is running in a severely
diminished mode due to the lack of liquidity. We still need to raise a sufficient amount of capital to provide the resources required
that would enable us to continue to operate the business.

Our costs
and expenses during the six months ended June 30, 2013 and 2012 are primarily comprised of (1) cost of goods sold: 6% and 5%,
respectively, (2) selling general and administrative expenses: 33% and 42%, respectively, (3) Common stock issued for services
rendered 27% and 22%, respectively, (4) Options expense: 1% and 0%, respectively, and (4) payroll and related taxes: 33% and 31%.
Cost of sales on a consolidated basis increased $8,037 to $18,285 for the six months ended June 30, 2013, from $10,248 for the
six months ended on June 30, 2012. Increase was due to a software development to improve the code and not the result of sales.
Selling general and administrative expenses increased by approximately $9,376, from $88,913 for the six months ended June 30,
2012 to approximately $98,289 for the six months ended June 30, 2013.

Common
stock issued for services rendered was $81,500 for the six months ended June 30, 2013 compared to $47,500 for the six months
ended June 30, 2012. This represents shares of common stock to be issued for services being provided by consultants in lieu
of cash payments during the period. Options expense was $3,198 for the six months ended June 30, 2013 compared to $0 for the
six months ended June 30, 2012. Payroll and related taxes for the six months ended June 30, 2013 increased by $32,219 to
$98,278 from $66,059 for the six months ended June 30, 2012. Increase is due to the employment agreement signed in August
2012 where as before that the CEO’s payroll was allocated based on time spent between Worlds Inc. and Worlds Online
Inc.

As a
result of the foregoing we had a net loss of $297,846 for the six months ended June 30, 2013 compared to a loss of $244,310 for
the six months ended June 30, 2012.

Our unrestricted
cash and cash equivalents was $2,732 at June 30, 2013. There were no capital expenditures in the three months ending June 30,
2013.

We were
unable to raise capital during the three months ended June 30, 2013. We continue to pursue additional sources of capital
though we have no current arrangements with respect to, or sources of, additional financing at this time and there can be no assurance
that any such financing will become available. If we cannot raise additional capital, form an alliance of some nature with another
entity, or start to generate sufficient revenues, we may need to further scale back operations.

Item
4. Controls And Procedures

As of
June 30, 2013, we carried out an evaluation, under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended).
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of June 30, 2013. The above statement notwithstanding, you are cautioned that no system is foolproof.

Changes
in Internal Control Over Financial Reporting

During
the quarter covered by this report there were no changes in our internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

This
quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public
accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only
management’s reports in this quarterly report.

We
are not obligated to disclose our risk factors in this report, however, limited information regarding our risk factors appears
in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under
the caption “Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q. and in “Item 1A. RISK
FACTORS” of our Annual Report on Form 10K. There have been no material changes from the risk factors previously disclosed
in our Annual Report on Form 10K.

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